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Utah to Restrict Confidentiality Clauses (Non-Disclosures and Non-Disparagement)

04 Apr

Update Applicable to:Effective date
All employers with at least 1 worker in UtahMarch 13, 2024

What happened?

On March 13, 2024, Governor signed H.B. 55 would make nondisclosure and non-disparagement agreements related to sexual assault and sexual harassment unenforceable.

What are the details?

H.B. 55 adds a new section to the Utah Antidiscrimination Act providing that:

  • Nondisclosure and non-disparagement clauses (defined as a confidentiality clause in the law) regarding sexual misconduct (sexual assault or harassment) required as a condition of employment are against public policy, void, and unenforceable.
  • Prohibits an employer from retaliating against an employee for (1) making an allegation of sexual harassment or assault, or (2) refusing to enter into an agreement or employment contract that contains such nondisclosure or non-disparagement clause.
  • Provides the employee 3 business days for revocation after agreeing to a settlement agreement that includes a confidentiality clause related to sexual misconduct to withdraw from the settlement agreement
  • Employers that attempt to enforce a confidentiality clause related to sexual misconduct in violation of these provisions cannot recover monetary damages for breach of the clause; however, they will be liable for all costs and attorney fees the employee incurs because of the legal action.
  • Does not prohibit an agreement between employer and employee who alleges sexual assault or sexual harassment from containing a nondisclosure clause, a non-disparagement clause, or any other clause prohibiting disclosure of the amount of a monetary settlement or, if requested by the employee, facts that could reasonably lead to the identification of the employee.
  • Does not prohibit an employer from requiring an employee to sign a post-employment restrictive agreement not to disclose an employer’s trade secrets, proprietary information, or confidential information that does not involve “alleged (or not) illegal acts.”
  • Is retrospective to January 1, 2023.

Business Considerations

  • Review your existing policies and practices regarding sexual harassment and settlement agreements.
  • Any agreement that contains a confidentiality clause has a 3-day revocation period, so consider that for future negotiations.
  • Since the law is retrospective to January 1, 2023, you should conduct an audit of existing agreements and make adjustments in accordance with the new requirements. You may need to notify employees if you make any changes.


Source References

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